Groupon goes after loyalty with U.S. launch of Rewards program

Groupon made its Groupon Rewards loyalty program available to all U.S. businesses today in an effort to counter claims that its deals are bad for business.

Groupon Rewards is the deal provider’s mostly-automated alternative to the store punchcard. Merchants offer rewards in the form of exclusive Groupons to repeat customers who spend above a certain amount using a credit card on file in their Groupon account. The program was previously being piloted in test markets such as Philadelphia.

With the program, merchants set their own spending requirements and rewards, and they receive payment analytics to assess the probability of their campaigns. For consumers, Groupon automatically tracks their spending at participating businesses and notifies them when they’re eligible to redeem a free Groupon reward.

And just how significant is Groupon Rewards to a company turn aound? Very, at least in Mason’s eyes. In the past two months, roughly 30 percent of merchants eligible to participate have signed up for the Rewards program, Mason said. “Though the preliminary dataset is small, pilot results show that Groupon Rewards customers are more loyal than other customers.”

“It’s too soon to say how Groupon Rewards will perform. But it is an incredibly crowded space, with companies like Facebook, Foursquare, American Express, and Google all having their own offerings,” Agrawal said in an editorial critiquing Mason’s outlined business prospects. “Rewards will have much smaller take rates than the daily deals business.”